* GM has brought technology/capital to Uzbekistan
* GM made 94 pct of new cars sold in Uzbekistan in 2011
* People wait for up to a year for new GM cars
* Some other foreign investors have fared less well
ALMATY, Sept 5 When a Tashkent resident flags
down a private car for a $2 ride, chances are it will be a
Chevrolet. Ninety-four percent of new cars sold in Uzbekistan
last year were made by General Motors - the biggest share of any
market served by the U.S. auto giant.
That General Motors should have a foothold in the
reclusive former Soviet republic owes much to the technology and
capital it brings to a country which, under veteran President
Islam Karimov, has been the graveyard of many foreign ventures.
Landlocked Uzbekistan, a mainly Muslim country of 29 million
in the heart of Central Asia, is ranked by rights bodies among
the world's most repressive states. Hundreds died in 2005 during
a bloody crackdown on an uprising in the Ferghana valley city of
The same, densely populated valley, where poverty fuels
simmering discontent with Karimov's rule, is home to the GM
plant where South Korean-trained workers file through electronic
turnstiles to sparkling production lines beyond.
Robots tease metal sheets into shiny new Chevys and workers
are trained to calmly respond to musical signals, in contrast to
the noisy bustle, embroidered skull caps and brightly coloured
gowns on display in Asaka, the town outside the factory gates.
A former Communist party apparatchik, Karimov, now 74, has
gambled heavily on building high-tech industries to try to cut
dependence on the export of cotton, gold and other raw materials
that were the backbone of Uzbek production in Soviet times.
"The Uzbek government's economic development model is
essentially one of import substitution," said Lilit Gevorgyan,
analyst at IHS Global Insight. "Uzbekistan lacks the capital and
the new technologies. The joint venture with GM is a good
example of how they can achieve this goal."
The compact Matiz and the Nexia sedan so ubiquitous in
Tashkent, the country's capital, are a throwback to the 1990s,
when South Korea's Daewoo Motor Co was Uzbekistan's joint
venture partner at the plant.
Daewoo Motor Co split from its parent, Daewoo Group, in 2001
and later became part of General Motors. In its current
incarnation, GM Uzbekistan is owned 25 percent by GM and 75
percent by state company UzAvtosanoat.
"We appreciate the great support of the Uzbek government,
which clearly recognises the fundamental role car manufacturing
can make to a nation's economy," a GM spokesman wrote in an
emailed reply to questions.
GM sold 121,584 vehicles in Uzbekistan last year, making the
country the eighth-largest market for its Chevrolet brand. The
joint venture produced more than 225,000 cars last year and will
raise output to 250,000 units this year.
On Wednesday, the company rolled out a new model, the
Chevrolet Cobalt, a family-size sedan aimed both at the local
Uzbek market and other former Soviet states.
Reuters text correspondents are not accredited to report in
Uzbekistan and permission was not granted to attend the launch.
But an accredited TV cameraman was admitted and also visited
GM's Asaka plant and engine plant in Tashkent with a
Marimjon Jumabayev, manager of the production line at the
Asaka plant which rolls out the Chevrolet Spark, described the
launch as a "great achievement".
"I am happy to glorify my nation, Uzbekistan," he said. A
Foreign Ministry official accompanied Reuters on the visit.
Not every foreign investor has met with success in
Uzbekistan. Russia's top mobile phone operator, MTS,
which trades on the New York Stock Exchange, has written off
$1.1 billion after its Uzbek licence was permanently revoked on
Uzbekistan's State Inspectorate for Communications cited
"repeated and systematic" violations when it first suspended the
MTS licence in July.
But the company says it is facing a "classic shakedown" of
the type that has forced out London-listed miner Oxus Gold
, U.S. company Newmont Mining Corp and Russia's
Wimm-Bill-Dann, now part of PepsiCo.
The dispute prompted the GSMA, an organisation uniting
nearly 800 mobile operators worldwide, to write an open letter
on Wednesday asking Karimov to intervene directly in a case that
has seen four local MTS managers imprisoned.
"The mobile communications industry is a lucrative source of
potential foreign investment to Uzbekistan, and other providers
may be hesitant to make investments after seeing what has
happened to MTS-Uzbekistan," GSMA Director-General Anne Bouverot
A U.S. State Department official raised the matter on a
visit to Tashkent last month, while the Helsinki Commission, an
independent U.S. government agency that monitors human rights,
has also written to Karimov to express its concern.
Ties between the West and Uzbekistan that soured after the
Andizhan massacre are warming again, however, in anticipation of
the drawdown of NATO troops from Afghanistan in 2014.
Neighbouring Uzbekistan has been a vital cog in the transit
route to supply NATO-led forces fighting the Taliban. U.S.
influence also acts as a counter-balance to Russia's strategic
designs on its former Soviet hinterland.
Secretary of State Hillary Clinton last year toured the GM
Powertrain-Uzbekistan plant in Tashkent, a separate joint
venture between GM and its Uzbek partner to make fuel-efficient
engines for its light vehicles.
"The U.S. hopes that having its businesses operating in
Uzbekistan will only help to cement their strategic relations,"
And GM is not alone. Case New Holland, for example, has been
manufacturing agricultural equipment in Tashkent for 15 years,
Robert Blake, Assistant Secretary of State for South and Central
Asia, said during a recent visit by a U.S. business delegation.
"I hear a consistent message that Uzbekistan has great
potential as an investment destination. However, to reach its
full economic potential, it should address persistent challenges
in the business and investment climate," Blake said in a speech
in Tashkent on Aug. 17.
"Delays in currency conversion prevent manufacturers from
importing the supplies they need to produce their finished
goods, and the problem can be compounded by complex and
uncertain customs procedures."
For GM, the launch of the Cobalt reinforces its presence in
the emerging markets now driving the growth of the world's top
auto makers. The car, which has optional six-speed transmission,
will also be built in Brazil for the South American market.
The Chevrolet Spark, the Captiva sport utility vehicle and
the glitzy Malibu sedan vastly outnumber the Russian-made Lada,
a relic of the Soviet era, on the dusty alleys of the ancient
Silk Road cities of Samarkand and Bukhara.
In a country where the economy is tightly regulated and
monthly wages average $300 in Tashkent and less in rural areas,
many would-be Chevy owners wait as long as a year to buy their
car, after making a deposit of up to 85 percent of its price.
The overwhelming popularity of the Chevrolet in Uzbekistan
can also be explained, in part, by prohibitive customs duties
and other taxes on imported cars.
A local journalist with knowledge of the car market, who
asked not to be identified, said by telephone that the myriad
costs incurred when importing a car could add up to 150 percent
of the actual purchase price.
Umid, a 21-year-old university graduate who, like many
Tashkent residents, makes a living driving his private car as a
taxi, said he had once tried to buy a second-hand Mercedes in
Dubai to replace his old Nexia.
"I called home and my friends made me drop the idea. The old
Mercedes would have cost me nearly as much as a brand new limo
in Uzbekistan," he said.
Humming a melody to himself as he weaved his tiny Matiz
through a leafy Tashkent suburb, Bahauddin, a 50-year-old former
shop assistant, is happy enough with his Chevy.
After quitting his job to undergo cancer surgery, the income
he earns ferrying passengers around the capital is just enough
to get by.
"I had no money to buy food," he said. "Now I have this car.
It's a real life-saver."
(Reporting by Almaty newsroom; Editing by Andrew Osborn)